November 29, 2021
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The African music industry is booming thanks to great musical talent, a wide range of musical sounds, a young population and growing internet connectivity. But it has not always been so. For example, the world’s largest music streaming service (with a 34% market share), Spotify, entered Nigeria in 2012, around the same time it expanded to Asia and the United States. United States. But, in 2012, smartphone and internet penetration in Nigeria was low, and the majority of the country was still using the 2G network. This automatically meant low adoption of the Spotify service and low revenue. So they dropped out of the market for a while.
In a bid to harness the potential of the African entertainment industry, global players like YouTube Music and Spotify are eyeing the continent. YouTube Music launched in South Africa in 2019 and Nigeria in 2020. Spotify returned to Nigeria last year, years after Nigerians started using virtual private networks (VPNs) and third-party payment apps like Flutterwave Barter’s payment gateway to bypass payment restrictions.
Converting a large user base into subscribers
A report by Media Research indicates that the MENA region, Asia-Pacific, Latin America and Africa will account for 73% of global music subscriptions by 2028, starting in 2020. But the average revenue per user in these developing markets is low: 3 to 5 times less. than in the United States and Europe. Spotify, for example, charges subscribers in the US $9.9 per month and those in the UK $13.97. But, in Nigeria, it charges $1.7 (₦900), and in South Africa $3.9 (R59.99). In India, subscribers pay between $1.63 and $2.00 per month.
Since 2018, Spotify has expanded to 48 African countries, but since it makes its money from subscriptions and the continent has low purchasing power, it doesn’t seem like the streaming giant is focusing too much on its game on the continent. According to a study by British research firm Midia Research, worldwide streaming subscriptions increased by 26.4% in the second quarter of 2021. They stood at 521.3 million subscribers at the end of the quarter, a huge growth from 109.5 million the previous year. But since the majority of that growth came from low-spending emerging markets, the 26.4% global subscriber growth didn’t translate into a huge increase in revenue.
It’s important to note, however, that Spotify’s game plan transcends music streaming: podcasts, audio advertising, audio branding, and audiobooks are crucial parts of its strategy.
What are the advantages of local platforms?
Even though local music platforms like Boomplay and Audiomack are barely known in the West, they have taken a head start in Africa. When YouTube Music launched in South Africa, Boomplay already had over 10 million downloads on Google Playstore. Boomplay apps come pre-installed on cell phones made by Chinese company Transsion, makers of phone brands like Tecno, Infinix and Itel, which are ubiquitous in Africa. This means that Boomplay’s 60 million registered users could well be its starting point. According to research firm IDC, Transsion recorded more than 40% of smartphone sales in Africa during the last quarter of 2019. As more and more Africans go online by the minute, it is very likely that they will will use these Transsion phones, and when they do, Boomplay app users will continue to increase.
These local actors also have a deeper relationship with the industry, the artists, the music community and the media; and they don’t have the payment barriers that some foreign streaming apps have. Not only Audiomack and Boomplay allow Africans to use their streaming platform for free, download and listen offline, but they allow them to use their service with affordable data. These platforms, instead of only presenting Western musicians to their audience, provide them with ways to discover exciting new African musicians. For new artists, it exposes them to millions of new audiences and offers them a ticket to stardom even if they haven’t yet secured a deal with a record label or distributor.
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Abu Dhabi’s Anghami, which went public on Nasdaq, New York, after a $200 million SPAC merger with Vistas Media Acquisition Company, is perhaps a prime example of the potential of broadcast platforms in local music. The Abu Dhabi-based streaming platform, which serves countries in the Middle East and North Africa (MENA), has become the first Arab tech company to go public. Anghami has over 70 million registered users and has a partnership with the three major music groups: Universal Music Group, Sony Music and Warner Music Group. Like Boomplay’s Transsion benefit and Audiomack’s partnership with telcos, MTN, Anghami has partnered with 37 telcos (as of last year) to help subsidize and promote its music services.
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Streaming services generated 84% of all US music revenue in the first 6 months of 2021, or $5.9 billion. Clearly, subscription is king, with paid subscriptions accounting for 78% of streaming revenue, growing 26% year-over-year to $4.6 billion. In total, streaming subscriptions accounted for approximately two-thirds (65%) of total recorded music revenue in the first half of 2021 in the United States.
On the other hand, Africa, whose streaming revenues are much lower. African artists have earned $300 million from streaming in 2021. things, remains unattractive to global companies. Still, there is a chance that the success of Tencent Music Entertainment and NetEase Cloud Music in China and Anghami in the MENA region (which combined have racked up 35.7 million subscribers in one year) could be replicated by local music streaming services like Boomplay and Audiomack in Africa. .
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Sultan Quadri, Editor, TechCabal.